The 2003 reform of the Common Agricultural Policy largely replaced the European
Union’s production orientated system of price support with a decoupled, single farm
payment (SFP) system that freed farmers to choose what to do with their land, be it
crops, livestock or withdrawal from farming. The outcome is reductions in the levels
of farm–gate prices and greater exposure to the vicissitudes of market forces. In
justifying the reform, the authorities argued inter alia that a positive outcome would
be the encouragement of a more market orientated and competitive farming industry.
In this paper we examine the likelihood of this outcome for UK agriculture and how it
might be achieved. We find the arguments that the reform will encourage extensive
farming techniques and this will serve as the basis of a more market orientated
industry unconvincing. We argue that the reform is more likely to achieve its
objective of a more market orientated industry if the reform encourages farmers to
collaborate in horizontal networks as user members of Farmer Controlled Businesses.
Such businesses operate as vertical integrators and are particularly suited to
developing a market orientation. We conclude by listing areas of research that can
aid an understanding of the marketing functions of Farmer Controlled Businesses and
their influence on the economic returns to their user members.